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SUMMARY OF TERMS
This Summary of Terms represents only the current thinking of the parties with respect to certain of
the major issues relating to the proposed private offering and does not constitute a legally-binding
agreement. This Summary of Terms does not constitute an offer to sell nor a solicitation of an offer to buy
securities in any state where the offer or sale is not permitted.
Issuer:
Type of Security:
Face value.
Term:
All principal, together with accrued and unpaid interest under the Notes,
is due and payable one year after the initial issuance of the Notes (the
Maturity Date).
Prepayment:
The Notes may not be prepaid without the prior written consent of
holders of the Notes that hold a majority of the aggregate outstanding
principal amount of the Notes.
Automatic Conversion: In the event the Company consummates, on or prior to the Maturity Date,
an equity financing pursuant to which it sells shares of its preferred
stock, which are expected to be Series A Preferred Stock (the Preferred
Stock), with an aggregate sales price of not less than $750,000,
excluding any and all indebtedness that is converted into Preferred Stock
(e.g., the Notes), and with the principal purpose of raising capital (a
Qualified Financing), then the Notes will automatically convert all
principal, together with all accrued and unpaid interest under the Note,
into the Preferred Stock and common stock. The conversion price will be
a price per share equal to the lesser of (i) the price per share paid by the
other investors purchasing the Preferred Stock in the Qualified Financing
and (ii) an amount obtained by dividing (x) $3,000,000 (the valuation
cap) by (y) the fully diluted capitalization of the Company prior to the
Qualified Financing (excluding the Notes). The total combined number
of shares of the Preferred Stock and common stock to be issued upon
conversion will equal (x) all principal, together with all accrued and
unpaid interest under the Note, divided by (y) the applicable conversion
price. Of those shares, the number of preferred shares will equal (x) all
principal, together with all accrued and unpaid interest under the Note,
divided by (y) the price per share paid by the other investors purchasing
the Preferred Stock in the Qualified Financing. Any remaining shares
will be common stock.
Voluntary conversion:
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conversion price equal to the lesser of (i) {_______} per share and (ii) an
amount obtained by dividing (x) $3,000,000 (the valuation cap) by
(y) the fully diluted capitalization of the Company prior to conversion
(excluding the Notes). The total combined number of shares of preferred
stock and common stock to be issued upon conversion in connection
with a preferred stock financing that does not constitute a Qualified
Financing will equal (x) all principal, together with all accrued and
unpaid interest under the Note, divided by (y) the applicable conversion
price. Of those shares, the number of preferred shares will equal (x) all
principal, together with all accrued and unpaid interest under the Note,
divided by (y) the price per share paid by the other investors purchasing
the preferred stock in the financing. Any remaining shares will be
common stock.
Liquidity events:
Other:
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